AIAENG.NS WACC - Weighted Average Cost of Capital

The WACC of AIA Engineering Ltd (AIAENG.NS) is 16.1%.

The Cost of Equity of AIA Engineering Ltd (AIAENG.NS) is 15.85%.

The Cost of Debt of AIA Engineering Ltd (AIAENG.NS) is 40.40%.

	Range	Selected
Cost of equity	14.30% - 17.40%	15.85%
Tax rate	22.50% - 22.50%	22.50%
Cost of debt	7.50% - 73.30%	40.40%
WACC	14.2% - 17.9%	16.1%

WACC

AIAENG.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.9	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.30%	17.40%

Tax rate	22.50%	22.50%
Debt/Equity ratio	0.01	0.01
Cost of debt	7.50%	73.30%

After-tax WACC	14.2%	17.9%


Selected WACC	16.1%

AIAENG.NS's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for AIAENG.NS:

cost_of_equity (15.85%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.9) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.